The most basic models of labor supply and demand would suggest that a bigger labor pool depresses wages, and indeed this is the argument taken up by many opponents of more open immigration policy.
Ideally, a guest-worker program would have no cap so labor flows would adjust with supply and demand.
Even if you hold everything fixed, there will be workers elsewhere in the world who at given the current supply and demand for labor in the U.S., and the resulting market wages, will find it optimal to move here and be hired.
Like everything else, the labor market is governed by the laws of supply and demand.
For Tony Volpon, a managing director in charge of emerging markets fixed income in the Americas over at Nomura Securities in New York, there are distinct factors changing the demand and supply of labor in the direction of tighter conditions.
The labor market is subject to the same laws of supply and demand as any other market.
We trade our labor for the the things we want, such that supply and demand always balance.
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The malign effects exist because there's a gap between the demand for and the supply of unskilled labor and that gap cannot be filled legally under existing immigration laws.
Free markets respond to supply and demand, and in the US the ready alternatives to domestic labor have placed it in an especially poor bargaining position relative to capital.
In fact, if you ask me what the level of employment will be five or 10 years from now, I would probably ignore demand factors and focus on supply factors such as the expected growth in the labor force due to demographics and factors affecting the labor force participation rate.
Any meaningful pick-up in demand should be supportive since supply remains constrained due to factors such as labor disruptions, declining ore grades and limited new major discoveries.
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